Unfinished zombie housing developments haunt the rural West

Timberline Ranch in Victor, Idaho, has 81 lots platted, and some infrastructure, including this bank of mailboxes. But just one lot has been sold and built upon; the other 80 are still owned by the developers.

Bradly j. Boner

Horseshoe Meadows, near Driggs, was subdivided in 2006 with lots ranging from about 3 acres to 10 acres, listed at more than $200,000 each. Today, most of the subdivision is still unoccupied, and it's possible to buy a lot for less than $100,000.

Bradly j. Boner

Matt Hail was developing two subdivisions in Teton Valley when the housing market tanked in 2008. Because of his development agreement with Teton County, Hail is required to finish the infrastructure in the subdivisions, in several phases over the next four years, despite having sold only four of the 44 lots. "All we can do is keep moving forward," Hail said. "I've put everything I have into this."

Bradly j. Boner

Teton Springs, the county's first big resort-style development, was approved in 2000, but today there are still hundreds of vacant lots.

Bradly J. Boner

Angie Rutherford became Teton County's planning administrator during a volatile time. Part of her job is to mitigate tension between longtime valley farmers and ranchers who fiercely defend their rights as property owners and those who want more assertive regulations on development.

Bradly J. Boner

Anna Trentadue, program director and staff attorney for Valley Advocates for Responsible Development, has been working with local developers to help replat zombie subdivisions, so they'll have less impact on the environment and be more appealing to buyers.

Bradly J. Boner

Bruce Arnold, a fourth-generation farmer, sits on Teton County's planning commission and has a reputation for fairness when considering planning and development issues facing the county.

Matt Hail grew up in sweltering metropolitan Phoenix and spent 11 years selling women's clothing, mostly wholesaling to department stores on the West Coast and across the Southwest. The job was boring, but he enjoyed vacationing at ski resorts, including Colorado's Vail and Breckenridge. Like many other people, he imagined changing his life by moving to some mountain valley surrounded by snow-crested peaks.

But unlike most daydreamers, Hail took bold steps to realize his vision. In 2003, he became a real estate developer near a major resort town, Jackson, Wyo. He started small by building a house in Alpine, a bedroom community about an hour's drive from Jackson, using his credit cards to help finance it. Then he leveraged his equity to make a down payment on 40 acres in Idaho's Teton County, one of the most beautiful places on the planet -- particularly in the eyes of developers.

The towering arrowhead peaks of Grand Teton National Park dominate the landscape, often given a heavenly alpenglow by the late-afternoon sunlight. Below them, national forest rolls down to the gentle Teton River Valley, laced by tributaries, expansive wetlands and habitat for an array of wildlife ranging from wolves to huge flocks of migrating sandhill cranes. The drive to Jackson takes only 45 minutes on the well-maintained highway over 8,431-foot Teton Pass. Back in 2003, the private land here -- the raw material for developers -- was far more abundant and cheaper than in Jackson. Nearly 200,000 acres of this rural county, amounting to 67 percent of it, was undeveloped farmland or otherwise privately owned.

Even better, Teton County's government was gung-ho for development. Since the late 1800s, when Mormon settlers first staked out the valley, the population had scarcely grown. But the local ski hill, Grand Targhee, had gained a reputation for prodigious powder, drawing tourists and a few vacation-home buyers. People who worked in Jackson were discovering they could find much cheaper housing over here in Idaho. And the national real estate boom, driven by cheap loans and speculation as well as dreams of a better life, was finally reaching attractive rural settings. A grand development scheme launched in 2000 signaled the county's new direction: The Teton Springs Golf and Casting Club aimed to build 600 residential units, a golf course, tennis courts, a swimming pool, hotel, shops and restaurants on 774 acres. The Teton Springs salesmen held a seminar in Las Vegas to recruit customers, and speculators from as far away as Michigan paid as much as a quarter-million dollars for residential lots.

The county government allowed Hail to subdivide his 40 acres of farmland near Driggs, the county's largest town, home to fewer than 1,500 people. Even before scraping out roads, he sold three of his 14 lots. The land cost $400,000, the roads and utilities another $200,000. In return, he gained $2.9 million in revenue within three years. It was almost like printing money. "A lot of it was California money," says Hail. "The second-home buyers, about 90 percent, were real estate speculators, buying land for future vacation homes."

Buoyed by his success, Hail returned for seconds and thirds. Acquiring bank loans was easy. So was getting the additional approvals from the county government. Unlike regulation-prone Jackson, "There were no barriers -- no impact fees, and it was a rubber-stamp process," Hail says. As the market grew more feverish, land prices rose, but Hail easily justified paying almost three times as much -- $1.12 million -- for a parcel almost identical to his original one. Then, in 2007, he paid $2.2 million for another 144 acres. He built a nice rustic barn-style home for himself, next to a pond in one of his developments, and moved in during 2008. The large windows framed a dramatic view of Grand Targhee and Grand Teton. Hail was $3.3 million in debt, but still optimistic.

Many farmers who had struggled for decades to grow potatoes or other crops in a hostile climate also thought their dreams had come true. Suddenly they could sell their land for many thousands of dollars per acre. The top of the market included River Rim Ranch, a development that aimed to build more than 600 homes, a lodge and a golf course on more than 5,000 acres -- OK'd by the county between 2004 and 2007. Another ambitious project, Huntsman Springs -- headed by two of former Utah Gov. Jon Huntsman Jr.'s brothers (their father, Utah billionaire Jon Huntsman Sr., was born in nearby Blackfoot, Idaho) -- was approved by the Driggs city government in 2007, with plans for about 680 new housing units, hundreds of hotel rooms and a golf course on about 1,340 acres. As more landowners got in on the action, many dozens of new subdivisions of just a few lots each, scattered throughout the valley, were also approved.

Thus, during the 2000s, Teton County became one of the West's fastest-growing rural communities. The population jumped more than 60 percent -- from 6,000 to nearly 10,000 -- not including all those who bought vacation homes here.

Today, several years into the nationwide recession and housing bust, Teton County is a real estate disaster, probably the worst in the rural West. The population appears to be declining; the 2011 U.S. Census didn't include a local estimate, but that's the general sense, as people leave seeking better opportunities in places like Salt Lake City and North Dakota's oilfields. And the problems go much deeper than that. The valley is trapped in a kind of development limbo. There are thousands of acres of incomplete subdivisions -- nicknamed "zombies" because they look partially or totally dead. An incredible statistic sums it up: About 7,200 lots that were approved and mapped out, or platted, still stand vacant. Many of these vacant lots are marooned without good roads and utilities; others are entangled with lots where houses were built, but some of those houses also stand vacant. The few that are occupied have the air of sheltering castaways.

Given the glut of unsold properties and a paucity of buyers, the average house price has plunged roughly 45 percent since 2008, with vacant lots down 70 percent, depressing the values of everyone's homes, and ruining some developers and investors. Like characters in a sci-fi movie, the county government is struggling to cope with the zombies, determined to either reshape them or kill them outright. At the same time, it has to keep spending taxpayer money to maintain the sprawl of access roads and other essential services. The damage to the landscape will take decades to fix.

Environmental groups say that Teton County's troubles prove that careful land-use planning is needed even in rural areas. But not everyone here agrees; political battles still rage over planning and regulations.

Hail is one of the real estate casualties. He barely avoided bankruptcy by selling his house and some lots in his first project for less than expected, even less than his costs. He returned the land in his second project to the man who held the mortgage, and sold most of his stake in the third, losing $600,000 in that deal alone. Today, he lives in a doublewide manufactured home in Driggs. He's learned lessons, he says, that go far beyond the obvious one that even the biggest booms inevitably go bust. Rural counties should impose regulations that encourage "slow and sustainable growth" and logical development patterns, he's concluded, rather than allowing -- and often encouraging -- a pell-mell rush. If you make mistakes like Teton County did, he warns, "It all happens fast, and you get no second chances."

More from Growth & Sustainability

Allen Best has researched and written an excellent article about my home valley, where I have mostly lived since 1981, one of the first non-Mormon outsiders (locally known as "mountain maggots") to settle here for the skiing, clean air and water, and open spaces. We've definitely experienced an extreme boom and bust in the classic western way; at least we don't have tailings piles or toxic ponds to deal with. But we also don't have much of an economy. As my mother warned me decades ago, "What are you going to do? You can't eat the view." Climate change is helping; the growing season is quite a bit longer than ever, 100+ days last summer versus an historic average of 70...We can grow something besides potatoes! John Borstelmann, Tetonia, Wydaho

Peter

Mar 13, 2012 10:56 AM

It is deeply saddening to see people like Matt Hail, an urbanite, dream about beautiful places only to want to drop subdivisions into them. People like Matt Hail are a truly industrializing force in the West and are here to bring the plague of development that they spent so much time and energy trying to escape.

Barbara A Smith

Mar 15, 2012 03:16 PM

The place is "spoiled". That means that too many or too greedy of our kind have been here already and have ruined the place. Yes, REGULATIONS are necessary.

derek goldman

Mar 22, 2012 03:37 PM

It all comes down to 5 letters: GREED! Greedy, ethically-bankrupt developers like Matt Hail have ruined Teton County, ID, Jackson, and many other places in the West. Hail and others of his ilk can all go to hell.

vard

Apr 05, 2012 11:49 AM

Matt Hail is not a "bad guy" here and telling him and others to "go to hell" is not productive or respectful. He has learned from his experience, and hopefully others can learn from it, as well.

It was the lack of any local planning and foresight that caused Teton County to succumb to the boom-bust cycle of development. Hopefully, Teton County, ID can learn from the past and now create a vision and adopt policies that have development pay for itself, while protecting the qualities that make the area special.

Michael McCoy

Apr 11, 2012 12:26 PM

For a slightly different (and perhaps more optimistic) look at the economy and real estate market in Teton Valley AND Jackson Hole, read "After the Boom" in the spring/summer 2012 edition of our magazine Teton Home and Living. The piece is written by Rob Marin, GIS analyst for Teton County, Idaho. No zombies on the cover, sorry. You can get it here: http://www.lifeinthetetons.com/[…]/ -- Michael McCoy, Powder Mountain Press

Ricky Titcomb

Feb 11, 2015 07:03 AM

Why are some of New York’s developers going to Israel? - Here is why: http://on.wsj.com/16szcQn. The thing is that the interest rates are lower by 50% there, says David Lichtenstein...